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MGM posts $227.1m net loss in H1 despite revenue growth


MGM Resorts International reported an overall net loss of $227.1m for the first half of its 2021 financial year despite experiencing a 54.0% year-on-year increase in revenue.

Total revenue for the six months to June 30 amounted to $3.92bn, up from $2.54bn in the corresponding period last year.

Casino accounted for $2.43bn of overall revenue, almost double the amount in the first half of last year, when its casinos were forced to close for much of the six-month period due to novel coronavirus restrictions. In contrast, MGM’s casinos were permitted to operate for the entire half this year.

Rooms revenue reached $563.4m, food and beverage revenue $460.1m, entertainment, retail and other revenue $324.2m, while MGM also received $133.2m in reimbursed costs.

In terms of divisional performance, regional operation led the way with $1.57bn in revenue, marginally ahead of the Las Vegas Strip resorts business on $1.55bn. MGM China revenue amounted to $607.0m, while management and other operations heralded $191.6m in revenue.

Expenses were 56.1% higher at $3.96bn for the period, and after accounting for $57.8m in income from unconsolidated affiliates, operating profit reached $17.1m, down 92.1% year-on-year.

However, MGM said adjusted earnings before interest, taxes, depreciation, amortization and restructuring or rent cost (EBITDAR) was positive at $834.6m.

After including $322.6m in non-operating costs, including $398.1m in interest expenses, partially offset by $119.5m in other income, pre-tax loss amounted to $305.5m, wider than $269.9m last year.

MGM received $59.9m in tax benefits, but despite this and after accounting for $18.6m in income from non-controlling assets, it posted a net loss of $227.1m for the half, compared to $50.4m last year.

Turning to the second quarter, revenue was 682.6% higher at $2.27bn, with this having been the period in which MGM was most impacted by Covid-19 last year.

Casino revenue reached $1.34bn in Q2, with rooms revenue at $365.0m, food and beverage revenue $302.7m, while entertainment, retail and other revenue hit $189.0m MGM also reported $75.1m in reimbursed costs.

MGM’s Las Vegas Strip resorts arm led the way in terms of divisional performance, posting $1.00bn in revenue, ahead of regional operations on $856.3m, MGM China with $310.6m and management and other revenue on $96.5m.

Expenses increased by 58.7% to $2.09bn during the three-month period, while income from unconsolidated affiliates reached $83.3m, meaning operating profit totalled $263.8m, a significant improvement on the $1.03bn loss posted last year. Adjusted EBITDAR also reached $616.8m for the quarter.

Non-operating costs amounted to $138.6m, leaving a pre-tax profit of $125.1m, compared to a $1.21bn loss in Q1 of 2020.

MGM paid $34.8m in tax and after also including $14.4m in income from non-controlling assets, MGM ended the quarter with a net profit of $104.8m, a stark contrast to an $857.3m loss last year.

“We delivered a strong second quarter, driven by robust demand and productivity efforts across our domestic portfolio,” MGM chief executive and president Bill Hornbuckle said.” Our Las Vegas Strip and regional operations adjusted property EBITDAR margins reached all-time records and our regional operations also delivered an all-time quarterly record in adjusted property EBITDAR.

“Our US sports betting and igaming venture, BetMGM, continues to outperform as the number two operator nationwide.”

Hornbuckle also referenced the recent announcement that VICI Properties, the real estate investment trust spun off from Caesars Entertainment in 2017, has agreed to acquire MGM Growth Properties, itself spun off from MGM Resorts, for $17.2bn. MGM Resorts, the majority shareholder in MGM Growth properties, will receive $4.4bn from the deal.

“We also recently announced several strategic transactions that furthered our goal of becoming a more streamlined, focused organization with stronger liquidity,” Hornbuckle said.

“We continued to advance that goal today with our announced agreement with VICI and MGM Growth Properties to monetize our MGP Operating Partnership units for $4.4bn in cash.”